Saudi Aramco to add 1.9 MMbbl of crude oil to its Japan storage

MOSCOW (MRC) — Oil giant Saudi Aramco will on Wednesday add 1.9 MMbbl of crude to storage that it holds in Japan, a Japanese trade ministry official said on Monday, said Hydrocarbonprocessing.

The move comes as Japan from this month raises the crude storage capacity that it lends for free to the state-run Aramco by 30% to 8.2 MMbbl, based on a previous agreement between the two nations.

The extra storage, which the Japanese government announced in July, will help Saudi Arabia, the world's biggest oil exporter, as it battles to keep customers in northern Asia amid a global glut and relatively low prices.

In return for providing free storage on the southern islands of Okinawa, Japan gets a priority claim on the stockpiles in case of an emergency.

Saudi Arabia currently holds a total of 6.3 MMbbl of crude in Japanese storage, the trade ministry official said, declining to be identified.

Aramco could not be immediately reached for comment. Japan is Saudi Arabia's biggest market for crude, but oil stored at the site in Okinawa has also been supplied to South Korea and China among others.

State-owned Saudi Aramco has stored crude in Okinawa since early 2011 at no cost. The east Asian nation has a similar deal with Abu Dhabi National Oil Co (ADNOC), under which ADNOC can store up to 6.29 MMbbl at Kiire oil terminal in southern Japan's Kagoshima.

As Japan has a priority claim on the stockpiles, it treats the crude oil stored by Aramco and ADNOC as quasi-government oil reserves, counting half of the barrels as national crude reserves.

Aramco and ADNOC need to fill at least half of the storage space at all times.
MRC

MOSCOW (MRC) -- Huhtamaki has completed the acquisition of International Paper's foodservice packaging operations in China, said the company on its web-site.

With the acquisition Huhtamaki expands its manufacturing footprint into the Eastern China region and strengthens its capacity and capability to serve customers operating in Northern China.

The acquisition comprises of two manufacturing units located in Shanghai and Tianjin, employing altogether approximately 200 employees. The net sales of the acquired business in 2016 was approximately EUR 19 million. The debt-free purchase price was EUR 15 million. The business will be consolidated into the Foodservice Europe-Asia-Oceania business segment as of September 1, 2017.

Huhtamaki is a global specialist in packaging for food and drink. With our network of 77 manufacturing units and additional 24 sales only offices in altogether 34 countries, we're well placed to support our customers' growth wherever they operate. Mastering three distinctive packaging technologies, approximately 17,400 employees develop and make packaging that helps great products reach more people, more easily. In 2016 our net sales totaled EUR 2.9 billion. The Group has its head office in Espoo, Finland and the parent company Huhtamaki Oyj is listed on Nasdaq Helsinki Ltd.
MRC

MOSCOW (MRC) -- Taiyo Vinyl is likely to complete turnaround at its polyvinyl chloride (PVC) plant at Chiba, reported Apic-online.

A Polymerupdate source in Japan informed that the company has planned to resume operations at the plant in mid-September 2017. The plant was taken off-line for a four-week maintenance on 17 August 2017.

Located in Chiba in Japan, the PVC plant has a production capacity of 90,000 mt/year.

As MRC informed earlier, in mid-April 2016, Taiyo Vinyl restarted its PVC plant following a maintenance turnaround. The plant was taken offstream in early March 2016. Located in Yokkaichi in Japan, the PVC plant has a production capacity of 310,000 mt/year.

Taiyo Vinyl Corporation, a subsidiary of Tosoh Group, is one of Japan's largest manufacturers of polyvinyl chloride (PVC). The plant in Chiba is one of the company's key assests, which supplies 50% of its products to the domestic market. The company also produces PVC at the plants in Yokkaichi and Osaka with the annual capacity of 310,000 and 150,000 tonnes, respectively.
MRC

MOSCOW (MRC) — Russia's top oil producer Rosneft plans to export a record 40 MMt of crude oil to China this year, Chief Executive Igor Sechin was quoted as saying on Sunday, said Hydracarbonprocessing.

Rosneft said previously it planned to ship 31 MMt of crude to China this year.

"In 2017 our company will deliver, according to our estimates, around 40 MMt of crude oil to China. It's a record volume," the RIA news agency quoted Sechin as telling Russian state television.

As MRC informed earlier, Rosneft has signed a contract to supply 96 MMt of crude oil to PV Oil, an affiliate of state oil and gas PetroVietnam, starting in 2017.

Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.
MRC

MOSCOW (MRC) -- A group of independent Chinese oil refiners is clubbing together to survive an onslaught by state-owned giants and the rise of private chemical giants, but industry analysts said the new alliance may find it hard to stick, reported Reuters.

Less than two years after becoming some of China's newest crude oil importers, around 20 independent plants in the eastern industrial heartland of Shandong province plan to form a joint venture to coordinate their production, marketing, crude oil imports and investments.

The new alliance, to be called the Shandong Refining & Chemical Group, is to be headquartered in the provincial capital Jinan, and as envisioned will be an upgrade on a crude-buying federation set up in early 2016 by some of the same members.

The new group of "teapot" refiners aims to pool funds and resources to produce fuels and chemicals more efficiently as they battle stiff competition in an increasingly saturated market and under tightened environmental and tax scrutiny.

"We see the need to advance to the next stage as we face competition from both the national team and the provincial team. We can't afford operating like a plate of scattered sand," said Zhang Liucheng, a vice president of Shandong Dongming Petrochemical Group, one of the initiators of the stronger alliance.

The earlier crude-purchasing club was too loose an organization and did not have much success, Zhang said.

But while Shandong Dongming and fellow founding member Qingyuan Group are trying to build a more formal structure, including registering the new company as early as next week with a capitalisation of USD7.7 B, there are few details such as a list of members and when they will start to commit funding.

Analysts said pooling the assets and coordinating the investments of 20 plants that have multiple private and local government owners will be a huge challenge.

"The new group shall have bigger political bargaining power, but it will be hugely difficult to align all the various interests," said Harry Liu, of consultancy IHS Markit.

That was reflected in the comments of an executive of a teapot refiner that was a member of the crude buyers' club: "Each plant has its unique product lines and marketing strategies, and every new investment is a result of thorough market studies. How would you expect the new group to coordinate?"

State-owned rivals Sinopec and PetroChina operate larger, more sophisticated plants, and have influence over government policies such as fuel export quotas, which are highly sought after as China's refined product output far exceeds demand.

Jiao Chong, managing director of Qingyuan Group, said the new venture could use its larger market presence to lobby the government.

The planned group would have a combined crude oil import quota of over 50 MMtpy, or 1 MMbpd, an amount on par with smaller state companies like Sinochem and China National Offshore Oil Company (CNOOC).

"We can become a stronger voice in lobbying for policies like fuel export quotas," Jiao said.

The need for the independent refiners to club together is heightened by the emergence of new rivals, such as provincial government-backed private chemical giants like Rongsheng Holding Group and Hengli Group that are building or planning refining complexes on China's eastern coast.

Rongsheng's first 400,000 bpd refinery is slated to start up as early as end-2018.

Hengli, a privately-owned chemicals producer, is building a similar-sized refining complex, industry officials said.

"New investments by the likes of Rongsheng have the integration skills and scale of production that teapots could barely rival, " said IHS' Liu.

Shandong Dongming is China's largest teapot refiner with a total operating capacity of 240,000 bpd.

We remind that, as MRC wrote previously, in March 2017, CB&I was awarded a substantial contract for the license, engineering design and catalyst supply for five proprietary technologies to be used in an integrated refining and petrochemical project in China. The complex will use BP Paraxylene OPEX advantaged crystallization technology exclusively licensed by CB&I, as well as technology for a vacuum gasoil hydrocracker, diesel hydrocracker, kerosene hydrotreater and delayed coker offered through Chevron Lummus Global (CLG). CLG is a JV between Chevron and CB&I.
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